May 11 (Bloomberg) -- Gleacher Investment Corp., the investment company formed by former Morgan Stanley and Lehman Brothers Holdings Inc. banker Eric Gleacher, filed to raise $500 million in an initial public offering.

Gleacher, based in New York, plans to use the proceeds to make debt and equity investments of $50 million or less in closely held companies with annual revenue of $25 million to $500 million, the company said in a U.S. Securities and Exchange Commission filing. Lehman is underwriting the share sale.

Gleacher and 11 other so-called business-development companies have filed to raise $6.25 billion since April 12. Gores Investment Corp., a firm run by Alec E. Gores, last week filed to raise as much as $250 million. Kohlberg Kravis Roberts & Co. and Blackstone Group LP also have filed to sell shares.

From January 1997 through April, business-development companies raised $4.1 billion, according to Freidman, Billings, Ramsey Group Inc. The companies distribute at least 90 percent of their income in dividends in order to be exempted from federal income tax.

To contact the reporter on this story: Brett Cole in New York at coleb@bloomberg.net.

Last Updated: May 11, 2004 08:01 EDT